Align Technology (ALGN) UBS Global Healthcare Conference 2024 summary

Market opportunity and investment approach

• Focus remains on long-term growth investments, especially in underpenetrated markets with 600 million potential patients and only 22 million orthodontic case starts annually.

• Adjustments to investment levels are made in response to tougher market conditions and lower patient traffic, as indicated by indices like the Michigan Index.

• Green shoots of recovery are seen in 30%-40% of business, particularly in Southeast Asia, Japan, Eastern Europe, Middle East, and Latin America.

• Double-digit growth is returning in some regions, driven by increased patient traffic and digitization of practices.

• Ongoing commitment to balancing growth investments with margin and return on investment considerations.

Growth drivers and business model

• Growth depends on increasing the number of doctor submitters and their utilization rates, with sequential improvement in doctor engagement.

• Utilization is the primary driver for accelerating growth, as doctors digitize practices and treat more cases.

• Programs like advantage tiers and iTero scanner adoption help drive both new doctor onboarding and higher case volumes.

• Financing partnerships with low or zero interest rates are stimulating patient conversion and treatment uptake.

• Product mix is shifting, with non-comprehensive products growing faster, but comprehensive still representing two-thirds of business.

Economic and market conditions

• Elective nature of treatments makes demand sensitive to inflation, interest rates, and consumer confidence.

• About a third of cases are externally financed and directly impacted by interest rates.

• Lower inflation and interest rates, along with greater certainty post-elections, are expected to improve demand, especially in North America and Western Europe.

• No direct correlation seen between GLP-1 drug spending and orthodontic demand, but overall consumer spending trade-offs are acknowledged.